Reuters: Pentagon Accounting Needs More Oversight

A Reuters investigation of Pentagon accounting methods discovers “doctored” accounts and “epic waste” are an everyday part of the system.

Reuters describes the waste and fraud in the system as “billions of dollars” but after reading their account it’s hard to see how anyone could even give an accurate estimate.

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The Defense Finance and Accounting Services routinely inserts “plug” figures into the books. In some cases it is later able to confirm actual amounts spent but in others it is not. In the latter case, the made up numbers simply remain in the record.

The GAO investigated Pentagon accounting in 2011 and found reason for concern, concluding “These types of adjustments, made without supporting documentation … can
mask much larger problems in the original accounting data.”

A 2012 reconciliation of accounts with the Treasury found $9.22 billion unaccounted for though the Pentagon claims only half a billion or so is the result of missing data. The rest is ascribed to “legitimate discrepancies.” However since the Pentagon has not been audited despite a law requiring it, there is no way to know how legitimate these discrepancies really are.

Sen. Coburn of Oklahoma and Sen. Manchin of West Virginia have introduced a bill which would penalize the Pentagon if it is not ready for annual audits by 2017. However, according to the Pentagon, there are 2,200 different computer systems handling accounting for the Penatagon. Some of these are still 1970s era mainframe systems with software written in COBOL. And Reuters notes that this 2012 report suggests the true number of systems may be closer to 5,000. So why hasn’t the Pentagon modernized and consolidated it’s computer systems?

The answer is that the Pentagon has tried and in several cases failed to bring these systems up to date. Reuters offers a chart showing a number of attempts, including one billion dollar system intended for the Air Force. That program was killed this year, as have been a couple other expensive attempts to bring payroll systems up to date.

The video clip accompanying the story touches briefly on the Obamacare rollout, noting that it is a much smaller misuse of money than some of the Pentagon’s aborted computer systems. What this shows is not that the Obamacare train wreck deserves less scrutiny and public attention but that the Pentagon’s use of funds deserves a bit more. America’s military is not immune to the problems that more generally plague government’s often careless use of taxpayer’s money.

The Reuters story published today is part 2 of an ongoing investigation into Pentagon accounting. Part 1 was published in July.